Interserve rejects claims over crunch lender meeting

Interserve has hit back at reports that it presented a rescue plan to banks yesterday, claiming it has been in ongoing talks with lenders since the start of the year and presented them with proposals weeks ago.

The outsourcer, whose shares have been weighed down by rumours the Government is monitoring its finances, said it was in "constructive and ongoing discussions" with banks over its three-year business plan.

Sources close to the company said the talks have been taking place on a weekly basis and were progressing well, with an outcome expected within the next two months. The Government is not thought to be attending these meetings.

Shares in Interserve have fallen by more than a third in the past month, after reports emerged that a specialist Cabinet Office team had been set up by the Government amid fears over the outsourcer's financial health.

The Cabinet Office issued a statement at the time saying: "We monitor the financial health of all of our strategic suppliers , including Interserve. We are in regular discussions with all these companies regarding their financial position. We do not believe that any of our strategic suppliers are in a comparable position to Carillion."

It was Carillion's collapse last month which spooked markets, causing investors to be wary of other outsourcers. Carillion was brought down by four major contracts, in a sign of a highly competitive industry which meant companies were bidding for contracts with ever-shrinking margins.

Interserve's problems, meanwhile, centred around its energy-from-waste contract in Glasgow, on which it was forced to make a £195m provision amid mounting costs.

The group, which employs 80,000 people worldwide, managed to secure £180m short-term funding in December, with those facilities set to expire on March 30.